Class act: Members of BTS pose for photos at a news conference in Seoul. The group’s management company, Hybe Co, is being urged on to raise its bid and buy out rival promoters SM Entertainment Co. — Reuters
SEOUL: A South Korean activist fund is calling for Hybe Co, the agency behind K-pop sensation BTS, to raise the price of its bid and offer to buy all shares in SM Entertainment Co, a smaller K-pop label.
Hybe, the No. 1 K-pop agency with NewJeans and other popular groups, launched an aggressive bid for nearly 40% of SM’s shares, assisting founder Lee Soo-man in his fight to block SM’s deal with Kakao Corp.
Hybe’s offering 120,000 won per share, for a total of 1.14 trillion won (RM3.9bil).
That price is too low, Lee Changhwan, chief executive officer at Align Partners Capital Management, said during an interview with Bloomberg News.
A partial stake would also lead to confusion and lower morale at SM, the manager of Girls’ Generation, he said. SM executives issued a statement opposing Hybe’s offer last week.
“We think operating profit can triple or more in three to five years,” chief executive officer Lee said. “My key focus is to maximise shareholder value.”
SM’s shares rose about 3% yesterday in Seoul. Hybe’s shares jumped as much as 4.7%.
While Lee is advocating for a higher bid and a complete takeover if Hybe proceeds, he also pointed out that the agency would have big hurdles in pulling off an acquisition.
Hybe should have done due diligence before announcing the proposed takeover, he said, adding that regulatory scrutiny is warranted because the combination of Hybe and SM would control more than 50% of the market.
“Hybe has made a risky move,” Lee said. “It has not done due diligence. The management and employees are against the takeover.
“The government should be looking into the deal for a potential antitrust issue.”
Align’s Lee was nominated to SM’s board, which last week announced plans for an issue of new shares to Kakao.
That 217 billion won (RM741.81mil) proposal, supported by Align, would have made Kakao SM’s second-largest shareholder and diluted founder Lee’s control over the company.
He also played down the prospects of a bidding war between BTS’ label and Internet conglomerate Kakao, which dominates the local social media scene.
Kakao is not planning to take over SM, and will remain a strategic partner, Lee said, denying market speculation that the deal is a prelude to an eventual takeover of the K-pop agency.
“The stance of SM Entertainment’s management and artists is clear. We don’t want to be acquired by anyone,” he said. — Bloomberg
